Evraz PLC · LSE:EVR
Evraz — H1 2008 Earnings Presentation
21 slides from Evraz's earnings presentation, Aug 29, 2008
Slide 1: EVRAZ GROUP 2008 Interim Results
EVRAZ GROUP 2008 Interim Results August 29, 2008
Slide 2: Disclaimer
Disclaimer 02 This document does not constitute or form part of and should not be construed as, an offer to sell or issue or the solicitation of an offer to buy or acquire securities of Evraz Group S.A. (Evraz) or any of its subsidiaries in any jurisdiction or an inducement to enter into investment
Slide 3: 1H08 Strategic Highlights
1H08 Strategic Highlights 03 Advance long product leadership in Russia and CIS ◦ Revenue from construction products in Russia and CIS grew by 52% ◦ Russian construction sales volumes increased by 19% ◦ Railway products sales volumes in Russia and CIS increased by 13% ◦ Expansion of DMZ (Ukraine) con
Slide 4: 1H08 Financial Summary
1H08 Financial Summary 04 US$ mln unless otherwise stated 1H08 1H07 Change Revenue 10,726 6,018 78.2% Cost of revenue (6,546) (3,724) 75.8% SG&A (954) (492) 93.9% EBITDA* 3,700 2,050 80.5% EBITDA margin 34.5% 34.1% Net Profit** 2,043 1,122 82.1% Net Profit margin 19.1% 18.6% EPS (US$ per GDR) 5.56 3
Slide 5: 1H08 Financial Highlights
1H08 Financial Highlights 05 1H08 EBITDA ◦ Revenue increased by 78%, driven by stronger pricing 185 14 and successful acquisitions US$ mln ◦ Wider geographical diversification: 796 ◦ Share of Russian revenues decreased to 40% ◦ Sales in European and American markets generated 31% of revenue 2,705 St
Slide 6: Prudent Balance Sheet Management
Prudent Balance Sheet Management 06 ◦ Despite additional funding for new acquisitions LTM Net Debt /EBITDA remains in line with a long-term target ◦ US$2 billion of long-term bond financing for 5 and 10 years raised at average cost of 9.1% ◦ ROCE maintained flat at 35% and RoA decreased to 15% Net D
Slide 7: Record Cash Flow Generation
Record Cash Flow Generation 07 ◦ Record high net operating cash flow of US$2,347 million ◦ Operating cash flow conversion at 64% ◦ Cash balances amount of US$919 million, including US$31 million in short-term deposits ◦ US$525 million used to finance capital investment programme, including US$250 mi
Slide 8: Steel
Steel 08 Steel Segment Revenue* Breakdown ◦ Average steel price grew by 41% y-o-y to US$887 per tonne 770 due to improved market conditions and increased share of US$ mln 277 1,963 higher margin products 534 ◦ Construction products revenues soared by 58% y-o-y on the back of a 20% increase in sales
Slide 9: Russia
Russia 09 ◦ Russian steel revenue grew by 44% in 1H08 fuelled by domestic construction growth and strong pricing ◦ Steel sales volumes of 3.8 million tonnes almost flat y-o-y with a shift in sales mix towards higher margin products ◦ Substantially all volumes of long products produced by our Russian
Slide 10: Construction Steel Market in Russia
Construction Steel Market in Russia 010 ◦ Russian & CIS steel demand remained strong US$/t Prices for Construction Products ◦ Rebar market grew by 17% in 1H2008 y-o-y 2,000 with Evraz sales of rebars up by 20% 1,500 ◦ Section market increased by 3% y-o-y while 1,000 Evraz sections sales volumes incr
Slide 11: Investments in Rolled Capacity Expansion
Investments in Rolled Capacity Expansion 011 US$1,800 million investment programme announced in May 2008 ◦ Implementation in 2008-2012 ◦ Additional 3 million tonnes of rolled products (+40% to 2007 volumes) supplied to the Russian market Railway rolled products: ◦ Wheel-rolling mill reconstruction a
Slide 12: North America
North America 012 Price Environment US$/t ◦ Average steel price grew by 22% to US$1,155 2,000 per tonne ◦ Substantial growth of flat products sales volumes 1,500 due to Claymont Steel consolidation (+182 thousand tonnes) 1,000 ◦ Revenues from rail sales increased by 15% 500 ◦ IPSCO Canada operations
Slide 13: Evraz Inc. Canada (IPSCO Canada)
Evraz Inc. Canada (IPSCO Canada) 013 ◦ IPSCO Canada, acquired in June 2008 for US$2.4 billion represents another successful strategic move in Evraz geographic diversification ◦ 2H08 EBITDA is expected to amount to US$400 million with revenue of US$1,150 million ◦ Crude steel production is expected t
Slide 14: Mining
Mining 014 1H08 Mining Segment Costs ◦ EBITDA increased by 134% to US$796 million 13% ◦ 11.3 million tonnes iron ore output, increasing self-coverage to 93% 28% ◦ Iron ore production cost of US$60/t in Russia and US$25/t 16% in Ukraine ◦ Coking coal production almost fully covered* steel making 5% r
Slide 15: Yuzhkuzbassugol
Yuzhkuzbassugol 015 ◦ The development programme to 2018 was approved with an objective of meeting internal needs of the Russian and Ukrainian production facilities ◦ Construction of a new mine Erunakovskaya-8 to be completed in 2010; output of 2 million tonnes of hard coking coal p.a. to be achieved
Slide 16: Mezhegey coal deposit
Mezhegey coal deposit 016 Map of Mezhegey deposit ◦ In July 2008, Evraz won the tender to develop the Mezhegey coal deposit in the Republic of Tyva, Russian Federation, for US$725 million ◦ World-class coking coal deposit with estimated coal resources of 213.5 million tonnes of hard coking coal (gra
Slide 17: Vanadium
Vanadium 017 ◦ Global leader with five operating units on three continents and geographically diversified revenues ◦ Vanadium business contributed* US$739 million to revenues and US$185 million to EBITDA ◦ Vanadium slag sales volumes unchanged at 5.9 thousand tonnes** ◦ Sales volumes of vanadium in
Slide 18: FY2008 Outlook
EVRAZ GROUP FY2008 Outlook
Slide 19: Outlook
Outlook 019 Consolidated revenues are expected to amount to approximately US$23,200- 24,600 million EBITDA is expected to be in range of US$8,000-8,500 million FY08 capital investments are budgeted at US$1,500 million ◦ Investment capex: US$1,100 million ◦ Maintenance capex:US$400 million FY08 Expec
Slide 20: Evraz's Global Business
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Slide 21: IR@evraz.com www.evraz.com
+7 495 232-1370 IR@evraz.com www.evraz.com